Interview with Mr. Shahzad Khan, Senior Anchor, Abb Takk TV
Profile:
Mr. Shahzad Khan is a veteran Senior News Anchor at Abb Takk News with over 25 years of distinguished experience spanning radio broadcasting and television journalism. Bringing a multi-faceted perspective to economic and social analysis, he also carries a decade of corporate leadership experience and continues to contribute to the academic sector as a dedicated educationist.
PAKISTAN & GULF ECONOMIST approached Mr. Shahzad Khan for his perspective on the Federal Budget 2026-27. Following is his perspective:
The FY 2026-27 Federal Budget: Balancing the IMF Straightjacket Against a Fractured Economy
Amid thunderous desk-thumping and sharp opposition protests, Federal Finance Minister Muhammad Aurangzeb stood at the podium of the National Assembly on June 12, 2026, to present Pakistan’s Rs 18.77 trillion (US$67.5 billion) federal budget for the fiscal year 2026-27.
On paper, the presentation was dressed in a narrative of macroeconomic triumphs. The minister proudly announced a historic milestone: the country’s economy has expanded to a record size of $452 billion, with per capita income ticking up to $1,901 and large-scale manufacturing clawing back to a robust 6.1% growth.
Yet, strip away the celebratory rhetoric, and the underlying documents expose a sobering reality. This fiscal layout is not an instrument of aggressive, sovereign economic vision. Instead, it is a highly calculated, defensive framework designed to satisfy a singular, all-powerful stakeholder: the International Monetary Fund (IMF).
The Co-Author in the Room: The IMF’s Permanent Shadow
To truly understand this budget, one must look at the strict constraints of the ongoing $7 billion Extended Fund Facility (EFF). The IMF’s invisible ink is dried across every major target. The Fund didn’t just advise; it structurally bound the government. The blueprint demands an aggressive clawback of provincial cash surpluses—aiming to lock away nearly Rs 2 trillion—to visually suppress the consolidated federal deficit. Furthermore, the state has formally committed to structural hard pills: phasing out all fiscal incentives for Special Economic Zones (SEZs) by 2035, and completely exiting commodity interventions in wheat and sugar to eliminate market distortions. While these measures are textbook formulas for stabilization and external credibility, they trap Islamabad in an economic straightjacket. The focus is starkly on stabilization at the explicit cost of expansion. It is a budget tailored to pass IMF reviews, leaving little room for homegrown economic maneuverability.
The FBR Revenue Gamble: Ambition Built on Shaky Ground
Perhaps the most glaring tightrope act is the Federal Board of Revenue’s (FBR) staggering collection target of Rs 15.26 trillion. This marks a steep climb from the outgoing year, resting on a highly fragile foundation. The government hopes to hit this astronomical number through Rs 430 billion in fresh budgetary enforcement measures and an aggressive 14% reliance on the petroleum levy—aiming to extract Rs 1.73 trillion, which could push fuel levies dangerously close to Rs 100 per liter.
The structural risk here is cyclical. This target inherently assumes an organic economic expansion based on a 4% GDP growth rate. However, if the private sector suffocates under high energy costs and heavy taxation, growth will stall, and the FBR will inevitably miss its mark. Historically, when direct tax targets collapse in Pakistan, the state resorts to mid-year “mini-budgets,” unleashing regressive indirect taxes that disproportionately crush the middle and working classes.
Infrastructure Rationing: The PSDP’s Survival Mode
The National Development Program was announced at a headline figure of Rs 3.675 trillion, with the Federal Public Sector Development Programme (PSDP) taking up Rs 1 trillion.
The administration has made tactical, necessary allocations to critical transit corridors. The National Highway Authority (NHA) secured Rs 224.5 billion to advance vital logistics arteries, including the Karachi-Quetta-Chaman dualization project and the long-awaited Hyderabad-Sukkur Motorway. Higher education also saw a record boost of Rs 46 billion. However, looking beneath the surface reveals that the development budget is effectively in survival mode. The Planning Commission admitted that funds have been strictly rationed just to keep legacy, ongoing projects on life support. There is virtually no room for new, transformative initiatives. For instance, the water sector received Rs 103 billion, but independent energy analysts warn that mega-dams like Diamer-Bhasha and Dasu require north of Rs 500 billion to avoid severe timeline slippages. By underfunding these giants, the budget kicks Pakistan’s critical water and energy security crises further down the road.
The Human Cost: Inflation, Debt, and the Silent Crisis
For the ordinary citizen, the budget presents a deeply contradictory landscape. The official goals project an optimistic drop in inflation to 8.2%. However, the budget’s own structural drivers tell a different story. The IMF-mandated increases in electricity tariffs, gas pricing, and skyrocketing petroleum levies act as direct, cost-push inflationary forces that will likely keep the cost of living high.
Furthermore, domestic job creation remains severely choked. Despite a 10% increase in the minimum wage and a 7% salary cushion for federal employees, genuine employment requires private sector capital expenditure. That expansion is currently frozen. The Finance Minister candidly noted that a massive portion of the Rs 18.77 trillion outlay is entirely swallowed by markup payments on old debt. High interest rates ensure that domestic borrowing remains prohibitively expensive for local businesses, preventing the industrial expansion needed to absorb a growing labor pool.
Finally, the budget treats Pakistan’s rapid population growth as a silent background crisis. While minimal funds are distributed to education (Rs 36.3 billion) and health (Rs 25.1 billion), these allocations remain mere drops in the ocean against an expanding demographic footprint.
Final Outlook
Ultimately, the FY 2026-27 budget succeeds as a clinical bookkeeping exercise. It stabilizes the state’s accounts, builds a bridge to international capital, and successfully prevents a fiscal collapse. But it does so by transferring the immense cost of that sovereign stability directly onto the shoulders of the Pakistani taxpayer.